IBD Editorials

Taxing The Rich More Will Backfire On The Middle Class

12/10/2012 06:50 PM ET

Taxes: How much can the U.S. government take from our most successful citizens? Theoretically, there might not be a limit. But the consequences for the less successful are huge, as one principled CEO points out.

"We've got to dig our way out" from under Bush policies, he contended. And "the president is saying that the wealthiest are most able to contribute" — after which Brodsky instantly admitted that raising taxes on the highest incomes "is not gonna dig us out alone."

Debating Brodsky, Euro Pacific Capital CEO Peter Schiff provided a sorely needed dose of realism: The successful — all those miserable Scrooges who provide tens of millions of Americans with their livelihoods — are already taxed far, far beyond any sane definition of "fair." Using himself as an example, Schiff pointed out:

"I'm paying 45% of my total income in income taxes, both to the state of Connecticut and to the federal government, and if you take the 3% Medicare tax."

Expiration of the Bush tax cuts next year would mean that "more than half of my total income is going to go to the government," Schiff said.

"Now, you tell me," he asked, "what's fair about that when medieval serfs paid 25%?"

A rightfully outraged Schiff declared that he doesn't "care what the majority voted to do. They don't have a right to steal my money just because they vote for it."

We almost never hear the case against high taxes made in such personal terms from a successful individual, because the media consider such arguments to be laughably unpersuasive. But Schiff went further.

"You know what the wealthy are going to do?" he asked. "They're going to invest more abroad. They're not going to work as hard."

As a result, "they're not going to pay as much in taxes" and "they're not going to employ as many people."

Ultimately, "their employees are going to pay all the taxes," Schiff cautioned, because "the fiscal cliff is just a small down payment on paying the piper," the real problem being out-of-control government spending.

Those who favor soaking the rich should be prepared for what happens next. When Democrats find they have nowhere near the cash the government demands, they, the nonrich, will get soaked, too.